Broker s call: Metropolis (Add)
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Updated on
CMP: ₹2225.00
The company has announced its acquisition of 100 per cent stake in Dr. SP Ganesan’s Hitech Diagnostic Centre (Hitech) in a cash and stock deal. Hitech is a leading player in South India (primarily Chennai and Bengaluru), with a network of 31 labs and 68 collection centers.
This acquisition will help Metropolis in strengthening its presence in South India, improving B2C contribution as Hitech has higher B2C proportion in revenue and in driving potential cost synergies in coming years.
Hitech had revenue of ₹83.30 crore in FY20, with EBITDA margin similar to Metropolis. 9M-FY21 revenue is up about 50 per cent, aided by Covid-19 related tests with higher EBITDA margin. We assume 40 per cent revenue growth in FY21 and flat FY22 revenue as Covid-19 contribution will decelerate in our view.